Vodacom Tanzania Says Fee Currency Switch Will Ensure Investment

By David Malingha Doya -
Dec 13, 2011

Telecommunications companies in
Tanzania are in talks with the government to pay fees in
shillings, a move Vodacom Group Ltd. (VOD)’s local unit said will
counter currency volatility and ensure investment.

“We currently pay license fees in dollars and operate in
shillings,” Rene Meza, the managing director of Vodacom
Tanzania, the East African country’s biggest mobile-phone
company by customers, said in an interview yesterday in Dar es
Salaam, the commercial capital. “The shilling has been very
volatile against the dollar and this could mean we have to cut
back on investment to pay regulatory fees.”

The currency of East Africa’s second-biggest economy after
Kenya weakened to 1,815 per dollar on Oct. 27, the lowest level
since the government liberalized the foreign-exchange market in
1994, according to data compiled by Bloomberg. The shilling was
0.1 percent stronger at 1,612 per dollar by 12:03 p.m. in Dar es
Salaam.

Telecommunications companies pay annual fees for earth
satellite stations, switching centers and networks at a rate of
0.8 percent of turnover in dollars, according to information on
the website of the Tanzania Communications Regulatory Authority.

Vodacom Tanzania is set to invest 100 billion Tanzanian
shillings ($62 million) over the next 12 to 18 months to expand
and improve its network coverage. “We are finalizing our
budget,” Meza said.

The company is also developing software that will enable
cross-border money transfers, including loans and health
insurance, with Safaricom Ltd. (SAFCOM) of Kenya. Safaricom is 40 percent
owned by Vodafone Group Plc (VOD), which owns 65 percent of Vodacom.

Active accounts

“We will leverage on the numbers of our sister-company in Kenya
to grow our M-Pesa money-transfer service,” Meza said.

Vodacom Tanzania, which expects to have 11 million
subscribers this month, said 3 million of its customers now have
active money-transfer accounts.

As of June Vodacom Tanzania had 9.2 million subscribers,
followed by Bharti Airtel Ltd. (BHARTI)’s local unit with 6.4 million and
Millicom International Cellular SA’s unit, known as Tigo
Tanzania, with 5 million, according to data on the regulator’s
website. Zantel, the Tanzanian unit of Emirates
Telecommunications Corp., had 1.3 million subscribers, and
Tanzania Telecommunications Ltd. had 226,153.

Vodacom Tanzania is considering outsourcing its tower
infrastructure, as it did with its network management, to Nokia
Siemens.

The companies are also in talks with the Tanzanian government
about introducing number portability. Meza said the service was
a failure in neighboring Kenya, where he was managing director
of Airtel Networks Kenya Ltd., a unit of Bharti Airtel.

“It is not about moving a number to another operator, but
what value that will add,” he said. “We are in high-level
talks with government and are waiting for guidelines on issues
like who will meet the investment cost.”